Underloved Tech Stock Upgraded on AI Potential

STX is climbing back toward its early-March two-year highs

Seagate Technology Holdings PLC (NASDAQ:STX) is up 9% to trade at $96.12 at last glance, after Morgan Stanley upgraded the tech stock to “overweight” from “equal weight,” with a price-target hike to $115 from $73. The firm cited many factors, including the potential for increased demand from generative artificial intelligence (AI). 

Today’s pop is poised to be the stock’s best single-session gain since January 2023, and has STX climbing back toward its March 6 two-year peak of $101.26. The pullback from those highs was captured by the $85 level — which has provided a floor of support since mid January — as well as its 80-day moving average. Since the start of the year, the equity is up 12.7%. 

For a security up 55.3% year-over-year, there’s still pessimism from the brokerage bunch. Of the 19 brokerages covering STX, 11 maintain “hold” or “strong sell” ratings, suggesting today’s upgrade could be the start of a sentiment shift from the analyst community. 

Options traders are loading up at a faster-than-usual rate after the bull note. So far today, 6,759 calls and 1,310 puts have been exchanged, which is four times the volume typically seen at this point. The most popular eight contracts are all calls, topped by the June 140 call, where new positions are being opened.

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